The Cyprus government unveiled its plans to contain rising unemployment and stimulate economic growth. The plans, announced by Minister of Finance Kikis Kazamias and Minister of the Interior Neoclis Sylikiotis, intent to streamline permit granting procedure for development projects both by the public and the private sector, exceeding three billion EUR in 2011 and 2012, as well as incentives for growth, in sectors such as energy, tourism and constructions.
`For this year and 2012 development projects of the private and the public sector either underway or in the process of commencement exceed three billion euro,“ Sylikiotis said. However he acknowledged that although permits are granted, projects delay due to the lack of finance resources. On his part, recalling that the “tight“ state budget for 2102 provides for lower state spending for development projects, Kazamias noted that the Finance Ministry plans to increase the implementation rate for development projects that would counterbalance the reduction of development expenditure
He added that a new service will be created in the Planning Bureau that would prioritise state projects according to their impact on growth employment and according to their risk assessment. Kazamias also said that Cyprus will establish a European Investment Fund in Cyprus, a subsidiary of the European Investment Bank, that would offer a guarantee mechanism which would provide access to funding resources for small and medium sized enterprises. Referring to the lack of funding for private projects, Kazamias recalled that the fiscal consolidation measures agreed on Friday during the meeting of the President of the Republic with the leaders of the political parties, include measures such as a tax exemption for profits to be re-invested into development projects.
He also said the government plans to grant incentives for the repatriation of capital by Cypriots as well as foreign investors, adding that the Cyprus Promotion Investment Agency will proceed with hosting road shows in a bid to secure funding by foreign investors. Replying to a question, whether these measures will contain unemployment which exceeded 8%, Kazamias recalled that the unemployment rate in Cyprus reached unprecedented levels, adding that the problem is exacerbated due to the presence of workers from other EU member-states.
“No one could imagine that unemployment rate could reach such levels in Cyprus,“ he added. On his part, Sylikiotis said unemployment in Cyprus deteriorated further after the accession of Bulgaria and Romania in the EU, which saw an influx of workers from these countries to Cyprus. Kazamias also said the government also plans to impose a levy on immovable properties of which the value is multiplied by town planning zone changes. Amid the continuing financial crisis, the Cypriot economy is marked by weak economic growth, projected at 0.5% in 2011 and 0.2% GDP in 2012, whereas the European Commission and the International Monetary Fund estimate the Cypriot economy will shrink by 1% GDP. Unemployment rate increased to 8.2% in October 2011 according to Eurostat.
